Consumer Spending and Inflation Drops in Japan Adding Pressure on Policymakers

Consumer Spending and Inflation Drops in Japan Adding Pressure on Policymakers

July marked halt for Japan's inflation as the consumer spending also dropped considerably. For the very first time in last two years Japan's household spending slid considerably to a low level that increased the pressure on the policy makers. A slew of fresh fiscal stimulus is expected to be introduced to support the frail economy.

Although from time to time Shinzo Abe's government has introduced stimulus measures to prop up the economy but they have failed to increase wages, push exports and prices by a significant amount. Even now, the analysts say that they doubt whether any added fiscal measures or monetary easing would yield considerable effect in boosting the economy.

The gloomy financial and export data which has also been tied to a slowing economy in China underpins the prevailing market outlook that any bounce back in economic growth from April-June's contraction, will be meek.

Taro Saito, a senior economist at NLI Research Institute said, "You can't stop overseas headwinds with policy measures, so it will be a waste of money. Traditional pork-barrel spending focused on public works spending won't do the trick."

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